1. Field of the Invention
The present invention relates generally to methods, systems, and articles of manufacture for analyzing patent-related information, computing patent valuation information and determining values of patents and patent portfolios, and, in particular, to methods, data processing systems, and articles of manufacture for determining the value of a patent or patent portfolio based on computed patent valuation information.
2. Background
Intellectual Property (often referred to as “IP”) plays a key role in many fields of business and can be very valuable. Modem market trends, especially those of the past two decades, have shown an increased awareness and understanding of the need for determining value of intangible assets in general and of intellectual property assets in particular. See Gordon V. Smith & Russell L. Parr, Valuation of Intellectual Property and Intangible Assets (John Wiley & Sons, Inc., New York, 1989).
The necessity to value a patent manifests itself many times during the patent's life and even before an application for the patent is filed. Initially, a decision must be made whether to file a patent application or keep the invention as a trade secret. It may be advantageous to repeat the valuation one or more times during the prosecution of the patent application to reflect the changing probabilities of issuance of the desired patent, particularly before the patent application is published. Valuation may be repeated again before the patent issue fee is paid, and yet again before each payment of periodic maintenance fees. Once issued, a patent may need to be valued in the context of a sale, an exclusive or non-exclusive licensing transaction, settlement of patent infringement litigation, patent sale and lease- or license-back transaction, charitable donation to a university or another non-profit institution, or post-issuance proceedings in the Patent & Trademark Office, such as reissue and reexamination proceedings. A patent may also need to be valued during a public offering, venture capital transaction, merger, acquisition, divestiture, bankruptcy or other capital restructuring events of the entity that owns the patent, or when the patent is pledged as collateral for a loan.
While all intellectual property assets are subject to unforeseen factors and managerial decisions regarding licensing and sale, patents are subject to a particularly wide range of decisions, both during the application process and following grant. Thus, patents exhibit a high degree of uncertainty as to their eventual value. See Robert Pitkethly, The Valuation of Patents: A Review of Patent Valuation Methods with Consideration of Option Based Methods and the Potential for Further Research (Judge Institute Working Paper WP 21/97, The Judge Institute of Management Studies, Cambridge, UK, 1997), incorporated herein by reference. Patent valuation is particularly difficult because of two factors: (1) the uncertainties about both the technical and commercial successes of the underlying technology in competitive markets, and (2) the potential for legal challenges that can occur both during the commercial application of the patented technology and during subsequent patent enforcement efforts.
The absence of efficient markets for trading patents—markets with many buyers, many sellers, and wide availability of information affecting prices—makes it difficult to value patents. Many consultants, writers, and other experts on the subject of patent valuation have proposed assigning a value to a patent by using techniques that seem to be reasonably well suited for the valuation of technology, but that appear to be ill suited for the valuation of patents protecting technology. Typically, when called upon to value a particular patent or patent portfolio, these experts value the underlying technology and present the result as the value of the patent or portfolio. Technology, however, is distinct from the patents that it underlies. Technology is knowledge that deals with applied science, engineering, or business methods as distinguished from patents, which are legal rights of exclusion. Technology can exist independent of patents and may be protected by other types of IP such trade secrets and know-how, for example. Therefore, the methods of valuation applicable to a technology may not provide adequate results when applied to valuation of the patents protecting the technology.
Another approach employed to value patents is the application of the “real options pricing theory” and the so-called Black-Scholes equation. In this approach, a parallel is drawn between the commodity-option relationship and technology-patent relationship. It is argued that what works (or should work) in valuing options, should also work in valuing patents. A patent, however, is unlike a commodity option in that it grants no affirmative rights, but rather it grants a negative right: the right to exclude others from exploiting the patented invention. The parallel between commodity options and patents, therefore, is not entirely justified, and the Black-Scholes pricing approach may not yield satisfactory results in many circumstances when it is applied to valuation of patents. This is not to say that a real option approach is not at all applicable to patents. When an inventor (or a manger) makes a decision to file a patent application, he or she thereby acquires an option on paying the issue fee (if the patent is allowed) and having the patents issue. Paying the issue fee, one acquires an option on a subsequent decision to pay a maintenance fee to keep the patent alive, etc. Although, a patent is not an option on the patented technology, a patent may be viewed as an option on enforcing patent monopoly, i.e. an option to file a lawsuit for patent infringement.
A need thus exists for intellectual property valuation methods that are based on the attributes of the property valued. A further need exists for intellectual property valuation techniques that produce analytical results reflective of real world risks, opportunities, and outcomes.